Wharton Aerospace & Defense Report

Influential Defense Business Board Recommends Cuts to Large Weapons ProgramsNovember 14, 2008

The Defense Business Board, a senior Pentagon oversight body, has warned President-elect Barack Obama that the Defense Department's current budget is simply "not sustainable" and that several weapons programs must be curtailed or eliminated, according to a report in the Boston Globe.

The briefing did not cite which programs should be cut, but analysts suggest the main targets will be the F-35 fighter jet, several Navy shipbuilding programs and a proposed new generation of Army ground combat vehicles, the Boston Globe noted. The reasons for the cuts: skyrocketing costs and long delays for each program, the analysts say.

The board’s report — which has not been made public yet — issued a dire warning noting the Defense Department "cannot reset the current force, modernize and transform all portfolios at the same time."

The Government Accountability Office, the investigative arm of Congress, recently analyzed the Pentagon's 95 largest weapons programs and found that, as of earlier this year, costs had collectively increased by nearly $3 billion over initial estimates, the Globe reported.

The Defense Business Board, made up of 20 private-sector executives appointed by the Defense Secretary, is considered an official government body and meets at least four times a year. The internal Pentagon advisory board said the budget problems are exacerbated by the rising costs of military personnel, overhead and health care costs. More than half of the annual defense budget now goes to "people costs," which include $60 billion in healthcare for current and retired soldiers, the board notes.

The level of budget cuts being suggested would deal a severe blow to the New England economy. The region is home to General Dynamics, which builds warships and submarines in Maine and Connecticut. Massachusetts' largest employer, Raytheon, has contracts from ships to missile defense and satellites, according to the report.